When it comes to investing, individuals often seek secure and reliable avenues that offer stability and potential growth. In this pursuit, 2023 government schemes emerge as attractive choices due to their inherent stability and backing by the government. These investment avenues provide individuals with a sense of security and confidence, making them an appealing option for those looking to protect and grow their wealth. In this blog post, we will explore some popular government-backed investment options and highlight their benefits and considerations.
Benefits of Investing in Government Schemes
Investing in government schemes offers several benefits, contributing to their popularity among investors. Here are some key advantages of investing in such options:
- Social-Economic benefits: Each government investment option is related to some social benefits; be it pension, social security, infrastructure financing, and forex reserves. Investing in these schemes is not only beneficial for investors but also plays a greater role in nation-building.
- Safe and Secure Returns: As this scheme is government-backed, returns have assured this scheme, and their interest is reviewed annually. Being backed by the government it provides a safeguard against default as most of them have pre-determined maturity amount and time, making it trustworthy.
- Diversification: Diversification is a key resource in portfolio construction, this practice helps investors tranquility against market volatility and provides the portfolio a safety net.
- Accessibility and Flexibility: They may have lower investment thresholds, making them suitable for a wide range of investors, including those with smaller savings Additionally, some options offer flexibility in terms of investment amounts, periodicity of contributions, and premature withdrawal, providing individuals with greater control over their investments.
- Tax Benefits: These benefits may include tax deductions on the invested amount, tax-free interest, or tax exemptions on capital gains. Utilizing these tax advantages can enhance overall investment returns and contribute to long-term wealth accumulation.
Some Famous 2023 Government Schemes
The Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a government-backed pension government scheme that is designed to provide a guaranteed pension to senior citizens after retirement. The scheme is open to senior citizens between the ages of 60 and 80 years. The minimum investment amount to the PMVVY is INR 1,000 and the maximum investment amount is INR 15 lakh. The PMVVY offers a guaranteed pension of 7.4% p.a. The scheme has a lock-in period of 3 years.
Type: Pension Scheme
Tax Benefits: Benefits under 80CCD
Interest Rate: 8.65%
Eligibility: 18-40 years, 20 years of minimum contribution
Investment Amount: Rs. 42 to Rs. 1,454 per month
Lock-in period: Unitil 60 Years
The Atal Pension Yojana is a simple and effective government scheme that provides social security to millions of workers in the unorganized sector. The scheme offers a guaranteed minimum pension, affordable contributions, and tax benefits, making it an attractive option for individuals wishing to secure their financial future during retirement. With the growing awareness about the importance of financial planning and retirement, the scheme is likely to attract more subscribers in the future.
Type: Pension Scheme
Tax Benefits: Benefits under 80C
Interest Rate: 7.40%
Eligibility: The contributor’s minimum age should be 60 years
Investment Amount: Rs. 12,000 – 15,00,000/ annum
Lock-in period: 10 years from the date
Health treatment should be accessible to everyone, but treatment costs are inflating at a rate of 14% per annum, which is highest among Asian countries, and 93.2% of Indians being employed in the unorganized sector can not afford health insurance. PMJAY, government scheme comes in as a savior for them, providing ₹5 lakhs per family per year for ₹500 per year.
Type: Health Insurance
Cashless Treatment payment
Coverage of Rs 5 lakh per annum
Eligibility: Socially and economically deprived
Investment Amount: Rs. 500/ annum
Lock-in period: None
Kisan Vikas Patra (KVP) is a savings scheme introduced by the Government of India. It encourages long-term savings among individuals, especially in rural areas. You can invest a minimum amount (e.g., Rs. 1,000) for a fixed period. The investment doubles after a specified period, and the interest rate is set by the government. KVP is transferable, considered secure, and the interest earned is taxable. It is advisable to check the latest rules and regulations before investing.
Type: Pension Scheme
Tax Benefits: Benefits under 80C
Interest Rate: 8.65%
Eligibility: 18-65 years
Investment Amount: Rs. 42 to Rs. 1,454 per month
Lock-in period: Unitil 60 Years
NPS stands for the National Pension System. It is a voluntary, defined contribution retirement savings scheme introduced by the Government of India in 2004. The NPS aims to provide retirement income to individuals in the organized sector, including employees from the public, private, and unorganized sectors.
Type: Pension Scheme
Tax Benefits: Benefits under 80CCD
Interest Rate: 10-12% (linked to market)
Eligibility: 18- 65 years
Investment Amount: Rs. 1000/annum
Lock-in period: Unitil 60 Years
Treasury bills are money market instruments issued by the Government of India as promissory notes with guaranteed repayment at a later date. Funds collected through such tools are typically used to meet short-term requirements of the government, hence, to reduce the overall fiscal deficit of a country.
T-bills are offered for individual purchases at a discount from the total price. The investors can then profit from the disparity when they are redeemed for a minimum. T-bills are issued at zero-coupon rates, meaning no interest is accumulated.
As a result, it serves as an essential financial instrument for the Reserve Bank of India. It supports RBI’s efforts to regulate and manage overall cash flow in the market.
Type: Debt Instruments
Tax Benefits: Benefits under 80C
Interest Rate: as per the issuer
Eligibility: 18 years and above
Investment Amount: as per coupon price
Lock-in period: as per bills ( 14 – 364 days)
Sovereign Gold Bonds (SGBs) were introduced as an alternative to physically holding this precious yellow metal in 2015 by the Reserve Bank of India to reduce the gold imports in India and also open an investment route for millennial investors.
SGBs are bonds issued by the Reserve Bank Of India under the Govt. of India that allow you to invest in gold (in grams) without the hassle of physically taking care of the purchased gold and taking away the hassle of safekeeping it.
Type: Gold Investment
Tax Benefits: Benefits under 80C
Interest Rate: capital appreciation + 2.5%/annum
Eligibility: entities including HUFs, Trusts, Universities, and Charitable institutions.
Investment Amount: as per the issue
Lock-in period: 3 Years
Sukanya Samriddhi Yojana was developed under the government’s ‘Beti Bachao, Beti Padhao’ initiative, it is a welfare scheme designed for the girl child. Investing in this child insurance plan allows their parents or legal guardians to ensure financial security for a girl child aged ten years or below. Under this government scheme, an account in the name of the girl can be opened across any private and public sector banks for 21 years. The tenure of investment under the SSY scheme is 21 years, starting from the account’s opening date.
Type: Future Fund
Tax Benefits: Benefits under 80CCD
Interest Rate: 8.00%
Eligibility: Maximum age of the child should be 10 years at the seed investment
Investment Amount: Rs. 50 per month and can be increased in multiples of 50
Lock-in period: Until beneficiary turns 21 years old
Conclusion
Investing in government-backed schemes offers numerous benefits that make them appealing to individuals looking for secure and reliable avenues for wealth protection and growth. These schemes provide social-economic benefits, ensuring stability and growth for both investors and the nation. They offer safe and secure returns, backed by the government’s guarantee, which provides investors with a sense of trust and confidence. Diversification is facilitated through these schemes, mitigating market volatility and offering a safety net for investors’ portfolios. Moreover, government schemes are accessible and flexible, accommodating a wide range of investors and allowing greater control over investments. The tax benefits associated with these schemes further enhance investment returns and contribute to long-term wealth accumulation.
It is important to consider the eligibility criteria, investment amounts, lock-in periods, and tax benefits associated with each scheme before making investment decisions.
Visit our blogs for a more detailed explanation of this scheme.
Overall, government-backed investment options offer stability, security, and potential growth, making them attractive choices for individuals seeking reliable avenues to protect and grow their wealth.
